Ken CC v Commissioner for the South African Revenue Service (VAT 22184) [2023] ZATC 15; 86 SATC 511 (8 December 2023)

Ken CC v Commissioner for the South African Revenue Service (VAT 22184) [2023] ZATC 15; 86 SATC 511 (8 December 2023)

The court found that Ken CC acted as an agent for foreign tour operators, providing package assembly and arranging services, not as a principal supplying tourism services. Ken CC did not own or control the tourism services, did not alter their nature or value, and only declared its commission as income for VAT purposes. The evidence, including contracts, invoices, and industry practice, demonstrated that Ken CC's role was limited to arranging and booking services on behalf of FTOs, with no direct supply to foreign tourists. SARS's reliance on the XO Africa case was misplaced, as the facts were distinguishable: XO Africa acted as principal, whereas Ken CC did not. The court held that Ken...

Citation
[2023] ZATC 15
Parties
Appellant: Ken CC; Respondent: Commissioner for the South African Revenue Service
Court
Tax Court
Jurisdiction
South Africa
Judgment Date
8 December 2023
Case Number
VAT 22184
Procedural Posture
Tax Appeal / Appeal Before the Tax Court
Outcome
Appeal upheld. SARS's additional VAT assessments for the disputed periods are set aside. Costs awarded against SARS.
Judges
Dickerson, Sunel Louw, Yolisa Molefe
Legal Topics
Value Added Tax, Agency Vs Principal, Zero Rating, Late Payment Interest, Late Payment Penalty, Tax Administration Act
Tax Law Value Added Tax Agency Vs Principal Zero Rating Late Payment Interest Late Payment Penalty Tax Administration Act

Case Brief

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Parties

Ken CC

Appellant

Commissioner for the South African Revenue Service

Respondent

Procedural Posture

Tax Appeal / Appeal Before the Tax Court

Legal Issues

  1. 1 Whether Ken CC supplied tourism services as principal or acted as agent for foreign tour operators.
  2. 2 Whether Ken CC's services to foreign tour operators qualify for zero-rating under section 11(2)(1) of the VAT Act.
  3. 3 Whether SARS was entitled to raise additional VAT assessments for the disputed periods.

Ratio Decidendi

The court found that Ken CC acted as an agent for foreign tour operators, providing package assembly and arranging services, not as a principal supplying tourism services. Ken CC did not own or control the tourism services, did not alter their nature or value, and only declared its commission as income for VAT purposes. The evidence, including contracts, invoices, and industry practice, demonstrated that Ken CC's role was limited to arranging and booking services on behalf of FTOs, with no direct supply to foreign tourists. SARS's reliance on the XO Africa case was misplaced, as the facts were distinguishable: XO Africa acted as principal, whereas Ken CC did not. The court held that Ken...

Court Disposition

Appeal upheld. SARS's additional VAT assessments for the disputed periods are set aside. Costs awarded against SARS.

Orders

  • The appellant's appeal is upheld.
  • The VAT 217 notices of additional assessment for the appellant's 2013/11 to 2018/08 VAT periods are set aside.